Tether's USDT used by 84% of Iran-linked sanctioned wallets, Senate Democratic report says
In brief
- Senate PSI Democratic staff report says 84% of 846 Iran-linked sanctioned wallets transacted mainly in USDT.
- Two sanctioned oil smugglers moved more than $603 million in USDT from 2021 to 2025, the report alleges.
- Blumenthal asked Treasury and the Justice Department to investigate Tether's sanctions compliance.
- Tether said it froze about $550 million tied to Iran's central bank in 2026.
What the report found
The report is titled "Tethered to Terrorism." It drew on blockchain records for wallets designated by the Treasury's Office of Foreign Assets Control (OFAC) and Israel's National Bureau for Counter Terror Financing between June 2021 and August 2026. The two lists look quite different: 87% of the 757 wallets the Israeli bureau designated transacted mainly in USDT, compared with 57% of the 101 OFAC designated.
Its largest allegation involves two sanctioned Iranian oil smugglers, Alireza Derakhshan and Arash Estaki Alivand. According to the report, they moved more than $603 million in USDT between 2021 and 2025 through a network that reached Hizballah, the Houthis and Iranian financial institutions. The report also says there's evidence the same network was used to buy and sell drones and other military equipment.
The staff say that before 2024, Tether didn't "comprehensively and consistently freeze" wallets designated by counter-terrorism agencies. In one case, the report says, $34.6 million kept moving through sanctioned wallets after they'd been designated. It also notes that Tether has called its OFAC compliance "voluntary," and the subcommittee contrasted that with the obligations banks face.
Letters to Treasury and DOJ
Blumenthal wrote to Treasury Secretary Scott Bessent and Attorney General Todd Blanche asking both departments to investigate Tether's anti-money laundering and sanctions compliance. He also pointed to Cantor Fitzgerald, which owns 5% of Tether and holds a large share of its assets. Commerce Secretary Howard Lutnick ran Cantor until recently, and his children now control it. The report cites Bloomberg reporting from March that Tether lent the children money to buy out their father's stake when he divested after his nomination.
On CNBC's Squawk Box on Tuesday, Blumenthal said the stablecoin was "not just a path, it's a superhighway" for sanctions evasion, money laundering and trafficking. He described enforcement by Treasury and the Justice Department as "none, zero."
"Tether is a preferred payment system for terrorist organizations—operating as a superhighway for the Iranian government to evade sanctions, carry out hostile drone & missile campaigns, & commit human rights abuses." (Blumenthal on X)
Tether's response
Tether published a statement the same day describing its work with law enforcement. It said actions involving USDT had frozen roughly $550 million across wallets that U.S. authorities linked to Iran's central bank during 2026, including more than $344 million in April. Tether says it has frozen more than $4.9 billion in total, working with over 340 agencies in 67 countries.
The statement didn't mention the subcommittee or its findings.
Frequently asked questions
What did the Blumenthal report find about Tether's USDT and Iran?
The Democratic staff report from the Senate Permanent Subcommittee on Investigations found that 84% of 846 wallets sanctioned or targeted for seizure over links to Iran and its proxies transacted exclusively or nearly exclusively in USDT. That was 87% of the 757 wallets designated by Israel's bureau and 57% of the 101 designated by OFAC.
How did Tether respond to the report?
Tether published a statement the same day describing its cooperation with law enforcement. It said USDT-related actions had frozen roughly $550 million tied to wallets that U.S. authorities linked to Iran's central bank in 2026, and more than $4.9 billion in total. The statement did not mention the subcommittee or its findings.
